February 2013 Archive for Ag in the Courtroom

John Dillard grew up on a beef cattle farm and now works as an agricultural and environmental litigation attorney with OFW Law. His blog analyzes legal issues and court decisions that affect America’s farmers and ranchers.

Is your feedlot being monitored by an activist group? Do environmentalist groups conduct flyover inspections of your property or search your reports to environmental agencies in hopes of finding a "paper violation"? Thanks to the folks at the EPA, it will be much easier for these groups to do so in the future.

Earlier this month, EPA released information it had been secretly collecting on concentrated animal feeding operations (CAFOs) to anti-CAFO groups including Earthjustice, the Pew Charitable Trust, and the Natural Resource Defense Council. This information includes the addresses of operations, names and contact information for operators. It also could contain information regarding operations, such as capacity and how manure is stored and applied. Environmental activists intend to use this information to monitor operations and bring litigation against farmers that they believe are violating environmental laws. We can also expect these activist groups to create a public database of operations similar to the Environmental Working Group’s listing of farmers and ranchers that receive government payments. All of this is intended to achieve the environmentalists’ end goal – shutting down CAFOs in the United States.

How Did This Happen?

Section 308 of the Clean Water Act (CWA) allows EPA to gather information from businesses and individuals to carry out the goals of the CWA. One caveat, however, is that any information (minus trade secrets) gathered by EPA under Section 308 is also available to the general public. In 2010, EPA entered into a settlement agreement with environmentalist groups where it promised to develop a regulation where it would gather information regarding CAFOs under its Section 308 authority. In July 2012, after facing strong opposition from both farm groups and the Department of Homeland Security over privacy and bioterrorism concerns, EPA relented and decided not to implement the data gathering rule. It seemed that the idea of a public national CAFO database was finally put to rest.

EPA, however, knows that there is more than one way to skin a cat. Without the fanfare of a relatively transparent public rulemaking, EPA secretly requested state environmental agencies to submit information that they held on animal feeding operations within their state. More than 30 states submitted information on operations; oftentimes states included information on farms that do not qualify as CAFOs under the CWA. Farmers, ranchers, and farm groups did not have knowledge that this information gathering was taking place.

Although America’s farmers and ranchers were kept in the dark, environmental groups were privy to the knowledge that this information gathering took place. These groups submitted a request for this information under the Freedom of Information Act (FOIA), which EPA complied with. Thus, these activist groups have access to data on CAFOs from over 30 states. While these activists could have submitted information requests under state "sunshine" or FOIA laws to individual states, EPA’s secret data gathering made these activists job much easier.

The Implications

It’s unclear exactly how this will play out, but those in animal agriculture could face increased scrutiny from activists. The CWA allows private citizens and groups to bring enforcement actions against CAFOs they believe have violated the CWA. Activist groups can bring private enforcement suits for violations ranging from illegal discharges to failure to meet submission deadlines for paperwork. Even if an operation is in compliance with the CWA, the cost associated with defending against a frivolous lawsuit can be steep. With easy access to a database of CAFOs across the country, we can expect to see the number of lawsuits filed by activist groups and opportunistic plaintiff’s attorneys to increase.

John Dillard is an attorney with Olsson Frank Weeda Terman Matz P.C. (OFW Law), a Washington, DC-based firm that serves agricultural clients and clients with issues before federal and state courts, EPA, FDA, USDA, and OSHA. John focuses his practice on agricultural and environmental law. He occasionally tweets at @DCAgLawyer.

[Disclosure: The author participated in drafting an amicus brief for the American Soybean Association and other trade associations supporting Monsanto’s position in this case.]

Modern agriculture will be front and center at the United States Supreme Court today when it hears oral arguments in Bowman v. Monsanto Co. At stake is whether Monsanto and other patent holders can enforce their patent rights on the progeny of seed that they sell. If the Supreme Court rules in favor of Monsanto, seed companies will have assurance that its patent rights are protected and will continue to invest in soybean biotech traits. However, if the court rules in favor of Bowman, seed companies will have a reduced incentive to invest in biotech traits for self-pollinating crops, such as soybeans and wheat.

Vernon Bowman is a corn, wheat, and soybean farmer from Knox County, Indiana. Bowman purchased seed for his primary crops through a Pioneer dealer, paid the necessary tech fees, and refrained from saving seed. However, starting in 1999, Bowman found a way to avoid paying tech fees on riskier, late-season soybean crops – he bought commodity grain from an elevator and planted it. Bowman then sprayed the grain elevator beans with Roundup, ensuring that the surviving crop contained Monsanto’s glyphosate-resistant technology. Bowman saved seeds from this crop and replanted them annually.

Bowman contacted Monsanto, disclosing his activities to the company; he explained that he thought his grain elevator seed was lawful. Monsanto felt otherwise and brought suit against Bowman for patent infringement in 2007. In 2009, Monsanto prevailed in federal district court in Indiana. In 2011, Monsanto also won an appeal at the Federal Circuit, which handles patent appeals. In October 2012, much to the surprise of patent law experts, the U.S. Supreme Court agreed to take on the case.

Patent Exhaustion

The issue presented in the Bowman case is whether Monsanto’s patent rights in Roundup Ready soybeans are "exhausted" when patented seed beans are sold to a farmer. The general principle behind patent exhaustion is to prevent patent holders from exerting control over their patented items once they are sold. For example, when you buy a truck, it contains a number of patents. However, once you buy it, you are free to do with it what you want – repaint it, drive it into a ditch, or pump Taylor Swift songs through the audio system. GM, Ford, and Dodge cannot tell you what brand of fuel to use, what brand of tire you must use, or which Taylor Swift songs (if any) are appropriate for their sound systems. The only prohibition that follows any patented item that you purchase is you cannot make copies of it.

However, the issue becomes more complicated with patented technologies that are capable of "self-replication," such as soybeans. In the Bowman case, Monsanto argues that the progeny of its Roundup Ready beans are "made" by farmers because the subsequent generations contain the glyphosate-resistant trait. Monsanto asserts that it has patent rights to the newly-made beans and these rights allow it to prevent these patented beans from being used for seed. Monsanto believes its patents extend to these beans, even if they are sold to a grain elevator as commodity beans.

Implications

This case has practical implications for those of us in agriculture. Soybeans, wheat, and other self-pollinating crops are amenable to saving seed. Monsanto and other biotech companies have used their patent rights to recoup their investments by prohibiting saving soybean seed. If Monsanto loses, then farmers may be able to bypass biotech fees by following Bowman’s grain elevator seed scheme. However, without the promise of annual biotech fees, seed companies are likely to shift their genetic investments to hybrid crops, such as corn, where seed saving isn’t practical.

I will be in attendance during today’s arguments and will keep you updated on developments in the case.

John Dillard is an attorney with Olsson Frank Weeda Terman Matz P.C. (OFW Law), a Washington, DC-based firm that serves agricultural clients and clients with issues before federal and state courts, EPA, FDA, USDA, and OSHA. John focuses his practice on agricultural and environmental law. He occasionally tweets at @DCAgLawyer.

Eminent domain is a necessary evil in modern society. Governments need to acquire land to build highways, sewage systems, and water delivery systems. Utilities need eminent domain power to deliver electricity and telephone services. We allow eminent domain takings to serve public purposes. In exchange, the Fifth and Fourteenth Amendments of the U.S. Constitution guarantee that landowners receive just compensation for land that is condemned in eminent domain proceedings.

However, what constitutes a "public purpose" has been the subject of much debate in recent years. It is generally accepted that governments can take property for public purposes such as building roads, schools, and government offices. Utilities are also provided the right to take land or easements to provide necessary services. More controversially, governments often provide themselves the ability to condemn property deemed as "blighted" and sell it to developers to encourage gentrification and urban revitalization.

By far, the most controversial definition of a public purpose is "economic development." Economic development is a vague purpose that is capable of justifying nearly any taking as suitable for a public purpose. In 2005, the U.S. Supreme Court was faced with deciding the constitutionality of a taking for economic development reasons in Kelo v. City of New London. In the Kelo case, a Connecticut town condemned several homes surrounding a public park. The privately-owned land was condemned with the intention of handing it over to another private party. The condemnations were part of a larger scheme to entice Pfizer to locate some office buildings in New London. To the chagrin of property rights proponents, the Supreme Court held that economic development could be considered a proper public purpose in a 5-4 decision. (Unfortunately, the property was condemned in vain. Pfizer was not enticed and the property now serves as a landfill for yard waste).

A Reason for Optimism

Unsurprisingly, the Supreme Court’s decision in Kelo was met with nearly universal outrage. States quickly sprang into action to re-write their statutes and constitutions to provide stronger protection for private property owners. Prior to the Kelo decision, only 8 states barred themselves from using economic development as a basis for eminent domain condemnation. Now, awakened to the potential disaster posed by the Kelo decision, 44 states have limited their eminent domain laws to exclude economic development as a basis for condemnation.

Virginia (apologies for bragging on my home state) may be at the forefront of providing property owners protection in cases of eminent domain. In 2012, 74% of Virginians voted to amend their constitution to dramatically change how eminent domain is conducted in the state. Not only did the constitutional amendment permanently enshrine the prohibition of Kelo-like takings, it also requires governments and utilities to only condemn portions of property that are essential to carrying out the public purpose. Furthermore, governments and utilities are required to compensate landowners for "lost profits and access" resulting from a condemnation. This means that governments must not only compensate a landowner for the actual land, but also account for what the land meant to a particular individual or business. Faced with these higher costs, governments and utilities are going to make more calculated decisions regarding what is actually necessary to satisfy a public purpose. Also, the total costs of an eminent domain condemnation will be properly borne by the responsible party, not an innocent landowner.

While eminent domain is often thought of as an issue affecting land on the urban fringe, individual farmers often find themselves in a situation where eminent domain condemnations and easements drastically alter the functionality of their property. For example, construction of greenways and public trails often involves takings of private lands. While these trails certainly provide a public good, they do so at the expense of private property owners. I look for more states to take such strong actions similar to Virginia’s amendment to stand up for landowner’s rights. Idaho’s senate recently failed to prevent their state government from protecting landowners from takings for this purpose. However, it is encouraging that this matter is attracting the attention of voters and legislators. In time, the will of the people will force governments to recognize stronger private property rights.

John Dillard is an attorney with Olsson Frank Weeda Terman Matz P.C. (OFW Law), a Washington, DC-based firm that serves agricultural clients and clients with issues before federal and state courts, EPA, FDA, USDA, and OSHA. John focuses his practice on agricultural and environmental law. He occasionally tweets at @DCAgLawyer.

EPA bit off more than it could chew when it went after Lois Alt - a West Virginia chicken farmer who is not afraid of a fight. Now, facing a lawsuit from Alt and opposition from the American Farm Bureau Federation and West Virginia Farm Bureau, EPA is attempting to back down from the fight. However, Alt and the Farm Bureaus do not want to let EPA off so easily.

Alt operates a broiler operation that was slapped with an enforcement order for alleged violations of the Clean Water Act (CWA) stemming from particulate emissions from the farm's ventilation fans. Specifically, EPA alleged that dust particles containing manure and feathers landed on the ground outside the chicken houses. EPA further alleged that an illegal discharge occurred when these particles came into contact with precipitation and entered nearby ditches.

This is one of the first times, but will certainly not be the last, that EPA has attempted to require a CAFO to obtain a National Pollutant Discharge Elimination System (NPDES) based on so called "dust and feather" discharges. As I've said previously, EPA cannot require a CAFO to have a NPDES permit unless the CAFO is "actually discharging." CAFOs, however, are designed not to discharge, meaning there are no pipes or ditches carrying animal waste into waterways. Thus, EPA is pursuing the novel "dust and feathers" discharge strategy to require CAFOs to obtain NPDES permits.

Alt found herself on the frontlines of EPA's assault on CAFOs when she received the enforcement order by EPA. Many operators would have chosen to fold because farmers and ranchers lack the resources to fight EPA. However, Alt chose to balance the playing field by filing suit in federal court, arguing that EPA was exceeding its authority. Soon, American Farm Bureau and West Virginia Farm Bureau intervened in the lawsuit to support Alt's side. The Farm Bureaus represented the interests of their members, who are concerned about EPA's new approach to CAFO regulation, which has national implications.

Facing this opposition, EPA flinched. Six weeks before both sides were scheduled to file briefs in federal court, EPA withdrew its enforcement order against Alt. Citing supposed improvements on Ms. Alt's operation discovered during a follow-up inspection, EPA said that the enforcement order is no longer necessary. Now, EPA claims that Alt's suit is moot and wants the federal court to dismiss it.

EPA's withdrawal of the enforcement order, which could carry penalties of up to $37,000 per day, is certainly a victory for Alt. However, this lawsuit pertains to issues of national importance, namely - what constitutes a discharge from a CAFO? If the lawsuit does not go forward, this question will remain unanswered.

Alt and the Farm Bureaus do not want to let EPA off the hook in the Alt case only to watch it make the same argument in another case. Instead, the Farm Bureaus want to litigate the "dust and feather" issue now. Thus, it will not consent with EPA's motion to dismiss the case.

American Farm Bureau is right when it says EPA upset the proverbial chessboard upon realizing it might lose in court. Now, it will be up to a federal judge to determine whether it will allow EPA to avoid having to defend its questionable enforcement actions in a court of law.

I will keep you updated on any developments in this case.

John Dillard is an attorney with Olsson Frank Weeda Terman Matz P.C. (OFW Law), a Washington, DC-based firm that serves agricultural clients and clients with issues before federal and state courts, EPA, FDA, USDA, and OSHA. John focuses his practice on agricultural and environmental law. He occasionally tweets at @DCAgLawyer.